The latest issue of Forbes magazine chose to feature a duo of money managers that have failed miserably since they took their Ranger Equity Bear ETF (HDGE) public in January of 2011. The ticker symbol is cute. The article is titled…

A version of this story first ran on forbes.com on June 26, 2013. The bearish suggestion came after a five-week pullback had turned most media outlets negative. Highlighting a 100% bearish play following a big decline was, as things turned out, a great contrary indicator.

Columnist William Baldwin did note that the fund had lost a lot of value since inception but suggested that sometime soon it might make a good play. The fund bets 100% on the bear side of the market which was a terrible place to be over the past two-and-a-half years.

Baldwin figured that the higher prices for the shorted stocks might lead to a big correction whenever some actual bad news besets them. HDGE is an actively managed ETF. It charges a higher than typical, for ETFs, 1.5% annual management fee. The fund incurs charges for borrowing the shares they short. Any dividends earned by the underlying shares must be paid by HDGE shareholders.

High fees are a big negative. I doubt many GuruFocus readers would consider a fund sporting 3.3% in annual charges, even for good returns.

What did HDGE shareholders get for their money?

From inception date through Wednesday July 3, 2013 the ETF had shown putrid results. While the DJIA, S&P 500 and NASDAQ had all gained around 30% the Ranger Equity Bear had lost 35.9% cumulatively.

How long can anyone stay wrong while sticking with a strategy that under performed by 65.9%? What could these guys actually know which allowed them to be positioned 180-degrees from correct? How far would the broad market have to fall just to get the faithful, but unlucky original owners of this fund whole?

Why in the world did Forbes decide to spotlight this ETF for its readers?

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